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Fashion, apparel, textile, merchandising, garmentsFashion, apparel, textile, merchandising, garments
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Ethnic Businesses in Multiethnic Cities
Ethnic Businesses in Multiethnic Cities
Eric Fong, Emily Anderson, Wenhong Chen, and Chiu Luk
University of Toronto
July 2007
Ethnic Businesses in Multiethnic Cities
Ethnic Businesses in Multiethnic Cities
Ethnic Businesses in Multiethnic Cities
Ethnic Businesses in Multiethnic Cities
Overview
An examination of ethnic business locations in multiethnic cities Multiethnic: Patterns of ethnic business location in
neighborhoods with various racial and ethnic compositions Multi-industry: Patterns of ethnic business location for certain
major industries
Argument: Ethnic business location is determined by optimization of:
1. Neighborhood business environment,2. Unique locational demand of each industry, and3. Spatial consequences of ethnic embedded structures of ethnic
businesses.
Ethnic Businesses in Multiethnic Cities
Overview
1. Literature Review
2. Discussion of Neighborhood Types and Industrial Sectors
3. Presentation of Hypotheses
4. Data and Methods
5. Results and Discussion
Ethnic Businesses in Multiethnic Cities
Literature Review Sociological Theory
The Chicago School: Ethnic business locations reflect the size of the ethnic population (Burgess, 1925)
Concept of Social Capital: Ethnic communities linked structurally, embedded ethnic relations (Portes and Sensenbrenner, 1993)
Ethnic Businesses in Multiethnic Cities
Theoretical Background Geographical Theory
Neo-classical “optimization” approach to business location (Weber, 1909; Lösch, 1949)
Structural linkages in ethnic and economic relations are facilitated and reinforced by spatial proximity (Dicken and Lloyd, 1990)
Dense patterns linkages create agglomeration economies whose benefits to all involved vastly outweigh their costs (Scott, 1998)
Ethnic Businesses in Multiethnic Cities
Four Neighborhood Types
1. Ethnic Enclave Neighborhood
2. Ethnic Clustered Neighborhood
3. Minority Neighborhood
4. Non-Minority, Non-Ethnic Neighborhood
Ethnic Businesses in Multiethnic Cities
The Ethnic Enclave Neighborhood Central to the ethnic community both socially and
economically High ethnic concentration
Many new immigrants Home to many ethnic businesses (Zhou 1992, Kwong
1979). Sustained by a sizeable local ethnic population
Ethnic Businesses in Multiethnic Cities
The Ethnic Clustered Neighborhood Lower ethnic proportion than enclave, but still has
an ethnic character Provide goods and services demanded by both the
ethnic and non-ethnic communities residing there (Logan et al, 2002)
Usually located adjacent to ethnic enclaves and spread over large area
Ethnic Businesses in Multiethnic Cities
The Minority Neighborhood Substantial number of other ethnic or minority group
residents – commonly found in multiethnic cities Not always located next to each other Frequently dominated by their own businesses, but
often contain a number of establishments operated by other ethnic groups
Ethnic Businesses in Multiethnic Cities
The Non-Ethnic, Non-Minority Neighborhood No substantial proportion of ethnic members or
minorities, often referred to as “majority” Industrially diverse yet proportionally few ethnic
businesses
Ethnic Businesses in Multiethnic Cities
Four Unique Local Business Environments:
1. The ethnic enclave neighborhood: Many ethnic businesses Low industrial diversity among ethnic businesses Larger proportion of recent ethnic immigrants
2. The ethnic clustered neighborhood: A large number of clustered ethnic businesses Many recent ethnic immigrants (but fewer than in the enclave)
3. The minority neighborhood: A smaller number of ethnic businesses A small proportion of ethnic businesses in adjacent
neighborhoods4. The non-ethnic/minority neighborhood:
A small number of ethnic businesses High levels of industrial diversity
Ethnic Businesses in Multiethnic Cities
Four Major Industrial Sectors:
1. Manufacturing
2. Retail
3. Food Retail
4. Finance, Insurance, and Real Estate
Ethnic Businesses in Multiethnic Cities
Ethnic Manufacturing Sector Industrial Characteristics
Small ethnic firms, often in subcontracting roles Labor intensive, unpleasant working environments, high
turnover Labor pool includes members of other ethnic groups
Unique spatial characteristics Need to locate near source of labor supply Avoid ethnic agglomeration with other co-ethnic businesses Seek ethnic agglomeration with other manufacturing
businesses Locate close to suppliers and transportation infrastructure
Ethnic Businesses in Multiethnic Cities
Ethnic Retail Sector Industrial Characteristics
Not food retailers; instead, are apparel stores, general wares, dollar stores, gas stations (Zhou)
Need to attract a wide variety of customers to reach profit Offer diverse products and services to their customers
Unique spatial characteristics Seek locations where there are other businesses to
maximize flow of shoppers Frequently serve co-ethnic members, so choose locations
convenient to them in ethnic enclave or clustered neighborhoods
Ethnic Businesses in Multiethnic Cities
Ethnic Food Retail Sector Industrial Characteristics
Often small in scale, deeply embedded in ethnic networks for recruiting workers and obtaining market information (Song, 1995)
Most customers are co-ethnic Unique Spatial Characteristics
Prefer locations with highest number of co-ethnic members, but may be discouraged by the high rents of ethnic enclaves
Smaller retailers mitigate high rents by locating in ethnic clustered neighborhoods, which still lets them access many co-ethnic customers.
Take advantage of scale economies by agglomerating with other food retailers
Low industrial diversity
Ethnic Businesses in Multiethnic Cities
Ethnic Financial, Insurance, and Real Estate Sector
Finance, Insurance, and Real Estate Sector Provide loans, mortgages, insurance coverage to
ethnic entrepreneurs and homebuyers Strong “interweaving” relationships that facilitate
information sharing, trust Unique Spatial Characteristics
Clustering to maintain essential business linkages Prefer locations in ethnic enclaves: main venue
for selling products and services to the widest range of co-ethnic customers
Ethnic Businesses in Multiethnic Cities
Hypotheses: Locational Preferences of Ethnic Industrial Sectors
1. Manufacturing Industry Fewer ethnic businesses Lower industrial diversity Fewer co-ethnic workers
2. Retail Industry Higher industrial diversity Larger ethnic populations
3. Food Retail Industry High co-ethnic population Fewer nearby ethnic businesses Lower overall industrial diversity
4. Finance, Insurance, and Real Estate Industries Larger co-ethnic populations Lower industrial diversity among all ethnic businesses Lower proportions of recent immigrants
Ethnic Businesses in Multiethnic Cities
Summary Hypothesis Matrix
MANUFACTURING RETAIL FOOD
RETAIL
FINANCE, INSURANCE,
REAL ESTATE
ETHNIC ENCLAVE
X X
ETHNIC CLUSTERED
X
VISIBLE MINORITY
NON-ETHNIC, NON-VISIBLE
MINORITYX
INDUSTRIAL SECTORS
NE
IGH
BO
UR
HO
OD
TY
PE
S
Ethnic Businesses in Multiethnic Cities
Data Business Directories: 2000 City of Toronto, 2001 York Region 2001 Census Tract Data included 85% Chinese in Toronto census metropolitan area Chinese businesses:
business name: sounds like a translation from Chinese (e.g. Wah Fung) uses a typically Chinese expression (e.g. Golden Happiness) comes from a well-known landmark in Hong Kong, mainland China, or
Taiwan contact name:
President, owner
Ethnic Businesses in Multiethnic Cities
Results: Table 1Table 1: Distribution of Chinese Businesses by Neighborhood Type and Industrial Sector
a) Chinese Businesses by Neighborhood TypesN %
Chinese Enclave Neighborhoods 1140 31.76Chinese Clustered Neighborhoods 482 13.43Visible Minority Neighborhoods 101 2.81Non-Chinese/Non-Visible Minority Neighborhoods 1866 51.99
b) Ethnic Businesses by Industrial SectorsN %
Manufacturing 433 12.06Retail (Except Food Related) 1995 55.59Food Retail 999 27.84Finance, Insurance, and Real Estate 162 4.51
Ethnic Businesses in Multiethnic Cities
Results: Table 2Table 2: Probit Regression Analysis of Industrial Sectors on Neighborhood Types
Manufacturing Sector -0.302 ** -0.066Retail Sector (except Food Related) 0.374 ** -0.06Food Related Retail -0.185 ** 0.141 **Finance, Insurance, and Real Estate 0.147 * -0.185Busienss Size: Small -1.606 ** 0.049 ** -1.564 ** -0.197 ** -0.195 ** -0.203 ** -0.195 **Business Size: Medium 0.030 -1.576 ** 0.020 0.008 0.291 ** 0.284 ** 0.283 ** 0.292 **Intercept -0.302 ** -0.594 -0.321 ** -0.372 ** -1.190 ** -1.162 ** -1.124 ** -1.190 **Log-Likelihood -2070.496 -2074.699 -2101.226 -2106.743 -1398.247 -1397.929 -1395.634 -1397.610N 3589 3589
Manufacturing Sector -0.05 0.558 **Retail Sector (except Food Related) -0.051 -0.286 **Food Related Retail 0.070 0.070Finance, Insurance, and Real Estate 0.064 -0.045Business Size: Small 0.438 ** 0.441 ** 0.436 ** 0.441 ** 0.972 ** 0.948 ** 0.940 ** 0.943 **Business Size: Medium 0.159 * 0.152 * 0.154 * 0.156 * -0.228 ** -0.236 ** -0.212 ** -0.208 **Intercept -2.041 ** -2.017 ** -2.066 ** -2.049 -0.043 0.188 ** 0.002 0.021Log-Likelihood -450.72 -450.613 -450.508 -450.736 -2345.036 -2358.14 -2378.979 -2379.954N 3589 3589Note: p* < 0.1; P** < 0.05
Chinese Enclave Neighborhoods Chinese Clustered Neighborhoods
Visible Minority Neighborhods Non-Chinese/Non-Visible Minority Neighborhoods
Ethnic Businesses in Multiethnic Cities
Controlling for the business size: Chinese manufacturing firms:
↓Chinese enclave neighborhoods ↑non-Chinese/non-visible minority neighborhoods
Chinese retails other than food retails: ↑ Chinese enclave neighborhoods ↓ non-Chinese/non-visible minority neighborhoods
Chinese food retails: ↓ Chinese enclave neighborhoods ↑ Chinese clustered neighborhoods
Chinese FIRE businesses ↑ Chinese enclave neighborhoods.
Ethnic Businesses in Multiethnic Cities
Results: Table 3
Table 3:Probit Regression Results of Business Environment of Different Neighborhood TypesChinese Enclave
Neighborhoodsp
Chinese Clustered
Neighborhoodsp
Visible Minority Neighborhoods
pNon-Chinese/Non-
Visible Minority Neighborhoods
p
Number of Chinese Businesses 0.010 * -0.002 -0.026 -0.010 **Number of Chinese Businesses in Adjacent Tracts 0..001 0.002 ** -0.006 ** -0.001 *Industrial Diversity of Chinese Businesses -0.851 -0.139 -0.213 -0.108Industrial Diversity of All Businesses -5.096 ** -1.766 * 1.233 1.583 **% Chinese Immigrants Arrived 1992 or After 1.887 ** 0.959 ** 0.684 -1.292 **Intercept -1.481 ** -1.341 ** -1.350 ** 1.116 **Log Likelihood -86.683 -154.2 -110.71 -239.96N 471 471 471 471Note: p* < 0.1; P** < 0.05
Ethnic Businesses in Multiethnic Cities
Results: Table 4
Table 4: Probit Regression Results of Industrial Locational Demands
ManufacturingRetail (Except Food
Related)Food Related
RetailFinance, Insurance,
and Real EstateNumber of Chinese Businesses -0.050 ** 0.093 ** -0.090 ** -0.003 Number of Chinese Businesses in Adjacent Tracts -0.071 ** 0.009 0.022 * 0.011Industrial Diversity of Chinese Businesses -2.517 ** 1.200 ** 0.027 -2.872 **Industrial Diversity of All Businesses 0.387 0.391 -0.595 * -0.276% Chinese Immigrants Arrived 1992 or After 0.139 0.195 -0.183 -0.505 *Business Size Medium -1.274 ** 5.833 0.898 ** -0.266 Small -1.820 ** 6.589 0.600 -0.730 **Intercept 1.154 ** -6.897 -1.007 ** -0.185Log Likelihood -925.101 -2034.000 -1881.910 -541.310N 3185 3185 3185 3185Note: p* < 0.1; P** < 0.05
Ethnic Businesses in Multiethnic Cities
Conclusion The results of our analysis have shown the
existence of different locational patterns by ethnic businesses involved in different industrial sectors.
Locations of ethnic businesses reflect the match among locational demands of a particular industry, spatial consequences of ethnic embedded structures, and a particular business environment of the neighborhood. Our data in general confirm our central assertion.
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